US Markets Close Down Despite Positive Earnings From Verizon And Qualcomm

The markets started the week off on a down note, with the Dow Jones down 0.64%.  The NASDAQ and S&P also were down closing at 1679.41 and 857.71 respectively.  The price on the 10-year treasury was down as the yield closed at 2.914%.  Gold contracts were down settling at $908.20, with crude oil also falling, settling at $50.14.

Verizon (NYSE:VZ) reported a 5.3% increase in earnings, as the telecom giant showed that they were not affected as severely by the economic downturn as other companies were.  The New York based company posted net income of $3.21 billion, or $0.58 per share, up a cent from the period a year ago.  Verizon also reported that revenue increased to $26.59 billion.  The effects of Verizon’s acquisition of Alltel Wireless were clearly seen this quarter, as revenue would have only increased 3.3% without the acquisition.  The Alltel acquisition showed that Verizon has seen the recent consumer trend of shifting away from landlines and going in the wireless direction, as it decided to add Alltel to increase their wireless customers.  Verizon was able to outpace their main rival, AT&T (NYSE:T), by adding 1.3 million new customers in the first quarter as opposed to the 1.2 million that AT&T added.  Both AT&T and Verizon have been taking advantage of the recent struggle of Sprint (NYSE:S) who continues to lose market share in the wireless phone arena.  Verizon also recently entered the high-speed internet and TV marketplace, and saw growth of 300,000 new customers this quarter.

In other earnings news, Qualcomm (NASDAQ:QCOM) was up over 4% as it announced earnings of $766 million, or $0.47 a share, beating analyst estimates of $0.42 a share.  Revenue for Qualcomm fell 5% to $2.46 billion, better then the street’s projected decline to $2.33 billion.  This was primarily due to a decline of 19% in chipsets for mobile devices, the companies largest segment.  CEO Paul Jacobs sees more wireless companies switching over to 3G, and sees his company benefiting from this switch and from the growth in CDMA devices.  Qualcomm looking forward is very optimistic, raising its revenue projections for the full year to $9.85 billion to $10.25 billion from the previous projected year end revenues of $9.3 billion to $9.8 billion.  Also on Sunday, Qualcomm settled their lawsuit with Broadcom (NASDAQ:BRCM) for $891 million, which will end all lawsuits between the companies.  The two companies had many lawsuits outstanding against each other relating to patent issues, and the settlement ends the final legal case.  With this resolved both companies are hoping to move forward and improve upon their businesses.

General Motors (NYSE:GM) proposed a $27.2 billion dollar plan to save the car company from bankruptcy.  The plan would give creditors 225 common shares for every $1,000 in debt that they hold.  This presents GM bond holders with an interesting dilemma, either to accept the deal that GM is offering them, or to keep their bonds and run the risk of getting nothing.  GM also plans on getting rid of the Pontiac brand by 2010 and cut its workforce to 40,000 from the current number of 61,000.  GM is hoping that these efforts will reassure debt holders that they are turning the company around to be a more profitable and better company moving forward.

Check back tomorrow for another market recap from Bullish Bankers.

Disclosure: The fund the author is associated with is long T and has interests in VZ.

Subscribe by RSS Subscribe by Email